The current rave over cryptocurrency has been reaching new heights especially with the meteoric rise of Bitcoin this year. Along with that, other cryptocurrencies such as Ethereum and Ripple are making significant impacts. The surge in popularity of cryptocurrencies raises many questions. For instance, is this just a fad set to fade away when the hype has decreased? More people have come out to defend cryptocurrencies claiming that they are an efficient investment to make even at their current record prices especially considering the instability of fiat currencies. Another major debate that has surfaced is whether or not Bitcoin will replace gold. Despite the overwhelming increase in value that Bitcoin has achieved in this year alone, reaching $10,000 recently towards the end of November, many people are still not convinced that the cryptocurrency will ever replace gold and there are legitimate reasons for this belief.


First, if we consider these assets as resources, it means that the investors are looking for the safety found in gold and bitcoin due to their assumed scarcity and store of value. We see, however, that gold is the real finite resource because whatever is mined and still in the ground is all the gold there is and will ever be. Bitcoin does not have that same level of finiteness and scarcity. There are protocols written that only allow for a maximum of 21 million coins to be mined. These contracts can change over time which would then allow for more mining.


Gold is also one of the most liquid assets currently in existence. Its value is not bound by any national borders, and it can be converted into cash on the spot. No matter where you go in the world, gold is inherently valuable, and people can exchange it for any local currency. This is an aspect of cryptocurrency which is still a long way from becoming a reality. Though more places abroad are accepting Bitcoin, it will be a long time before it becomes accepted on a mainstream basis. Gold’s liquidity is due to the size of its market. The total value of all the gold that was ever mined stands at about $7.8 trillion according to the World Gold Council. If you compare the cryptocurrency market, you will find that it has a lot of ground to cover to reach that value. Currently, the cryptocurrency market is valued at approximately $161 billion, split amongst 1,170 different cryptocurrencies.


 Another reason why Bitcoin and the cryptocurrency trend are unlikely to overtake gold is that rumors suggest that a majority of cryptocurrencies will dissipate. According to experts, only a few of the many cryptocurrencies will become the standard, and it is unclear which ones that will be. Due to the longevity of gold, it is clear that stocks and bonds have low or negative correlations with gold making it a powerful investment.


While cryptocurrencies like Bitcoin continue to reach new heights in value, it is still relatively new in comparison to gold and has yet to become the safe-haven asset gold has become over the years.